Chairman's Message | February 28, 2018 Robert A. Lawrence Dear Shareholder: The municipal bond market posted a moderate gain for the 12 months ending July 31, 2015, with the strongest performance occurring early in the period. As the calendar turned to 2015, the market reversed course, as the negative headlines of a few troubled issuers and worries of rising rates gave investors pause. Demand, as measured by industry fund flows, was strong early in the period; supply remained muted as many issuers exercised fiscal conservatism. These factors, coupled with improving credit fundamentals for many municipal issuers, led to stronger returns during this time frame. The favorable trends reversed in early 2015. Demand weakened, as the focus of the municipal market shifted to the budget difficulties of a handful of issuers, with unfunded pension liabilities playing a prominent role in all these situations. This, in turn, led to headline-making downgrades by credit-rating agencies, sales by some investors and lower bond prices. Investors also had to contemplate the effects of a potential shift in monetary policy by the U.S. Federal Reserve, including the prospect of higher interest rates and lower bond prices. These issues continued to serve as a reminder of how challenging it can be to successfully navigate the municipal bond market. It remains important for investors to consider their municipal investments in the context of their overall asset allocations and their expectations for fixed income holdings in a variety of market scenarios. That is also why we focus on longer investment horizons in our evaluation of issuers and market environments. For the trailing 12 months, Fidelity's municipal bond funds benefited from our disciplined, risk-aware approach, reflecting our goal of generating strong long-term performance with lower volatility relative to peers. Looking ahead, we will continue to search for value across all sectors of the municipal market, combining the strength of our bottom-up credit and security analysis with our top-down macro research. While a variety of factors may affect the market in 2015 and beyond, municipal bond investors continue to enjoy the benefits of tax-exempt income, the value of which has been enhanced by tax increases and the 3.8% Medicare tax on unearned, non-municipal investment income. I know you have many choices for where to invest your money. Thank you for your confidence in Fidelity's investment management capabilities. For more information on current market developments, please visit our websites. Sincerely, Robert A. Lawrence Chairman of the Board of Trustees Strategic Advisers Funds Not FDIC Insured • May Lose Value • No Bank Guarantee Please see the next page for important information.
Transcript
Chairman's Message | February 28, 2018
Robert A. Lawrence
Dear Shareholder:
The municipal bond market posted a moderate gain for the 12 months ending July 31, 2015, with the strongest performance occurring early in the period. As the calendar turned to 2015, the market reversed course, as the negative headlines of a few troubled issuers and worries of rising rates gave investors pause. Demand, as measured by industry fund flows, was strong early in the period; supply remained muted as many issuers exercised fiscal conservatism. These factors, coupled with improvingcredit fundamentals for many municipal issuers, led to stronger returns during this time frame.
The favorable trends reversed in early 2015. Demand weakened, as the focus of the municipal marketshifted to the budget difficulties of a handful of issuers, with unfunded pension liabilities playing a prominent role in all these situations. This, in turn, led to headline-making downgrades by credit-ratingagencies, sales by some investors and lower bond prices. Investors also had to contemplate the effects of a potential shift in monetary policy by the U.S. Federal Reserve, including the prospect of higher interest rates and lower bond prices.
These issues continued to serve as a reminder of how challenging it can be to successfully navigate the municipal bond market. It remains important for investors to consider their municipal investments in the context of their overall asset allocations and their expectations for fixed income holdings in a variety of market scenarios. That is also why we focus on longer investment horizons in our evaluation of issuers and market environments.
For the trailing 12 months, Fidelity's municipal bond funds benefited from our disciplined, risk-aware approach, reflecting our goal of generating strong long-term performance with lower volatility relative topeers. Looking ahead, we will continue to search for value across all sectors of the municipal market, combining the strength of our bottom-up credit and security analysis with our top-down macro research.
While a variety of factors may affect the market in 2015 and beyond, municipal bond investors continue to enjoy the benefits of tax-exempt income, the value of which has been enhanced by tax increases and the 3.8% Medicare tax on unearned, non-municipal investment income.
I know you have many choices for where to invest your money. Thank you for your confidence in Fidelity's investment management capabilities. For more information on current market developments,please visit our websites.
Sincerely,
Robert A. LawrenceChairman of the Board of TrusteesStrategic Advisers Funds
Not FDIC Insured • May Lose Value • No Bank Guarantee
Please see the next page for important information.
Before investing, consider the funds' investment objectives, risks, charges and expenses. Contact your investment professional or visit fidelity.com or advisor.fidelity.com for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.
Views expressed are through the end of the period stated and do not necessarily represent the views of Fidelity. Views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Risks: Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market or economic developments. The securities of smaller, less well-known companies can be more volatile than those of larger companies. In general, the bond market is volatile, and fixed-income securities carry interest rate risk. As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities. Fixed-income securities also carry inflation, credit and default risks for both issuers and counterparties. Lower-quality bonds can be more volatile and have greater risk of default than higher-quality bonds. The municipal market is volatileand can be significantly affected by adverse tax, legislative or political changes and the financial condition of the issuers of municipal securities. Income exempt from federal income tax may be subject to state or local tax. Leverage can increase market exposure and magnify investment risk. Foreign securities are subject to interest rate, currency exchange rate, economic and political risks, all of which are magnified in emerging markets. The investment risk of target date funds changesover time as their asset allocation changes. These risks are subject to the asset allocation decisions of the Investment Adviser. Pursuant to the Adviser's ability to use an active asset allocation strategy, investors may be subject to a different risk profile compared to the target date funds' neutral asset allocation strategy shown in their glide path. Target date funds are subject to the volatility of the financial markets, including that of equity and fixed-income investments in the U.S. and abroad, and may be subject to risks associated with investing in high-yield, small-cap, commodity-linked and foreign securities. No target date fund is considered a complete retirement program and there is no guarantee any single fund will provide sufficient retirement income at or through retirement. Principal invested is not guaranteed at any time, including at or after the funds' target dates.
Past performance does not guarantee future results.
Diversification does not ensure a profit or guarantee against a loss.
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